According to legal filings published Tuesday, Elon Musk has sold nearly $7 billion in Tesla shares amid a high-stakes legal battle with Twitter over a $44 billion buyout deal.
According to filings on the Securities and Exchange Commission, Musk sold 7.9 million shares between August 5 and 9. “It is critical to avoid an emergency sale of Tesla stock in the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners do not come through,” Musk, the world’s richest man, wrote on Twitter late Tuesday.
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The transaction is the first since Tesla and SpaceX CEO Elon Musk sold $8.5 billion in stock in April, shortly after agreeing to buy Twitter for $44 billion. He increased his cash reserves as he dealt with Twitter’s demands for the acquisition to be completed.
Musk began selling large amounts of stock late last year, with a large portion of the proceeds from stock option exercises being paid in taxes. He polled his Twitter followers at the time about whether they wanted him to sell some of his stock and pay taxes before selling about $16.5 billion in shares.
What should you be aware of? Musk announced the agreement’s termination on Twitter on July 8. He claimed that Twitter understated the number of bots, spam, and fake accounts on its network and failed to provide him with all the information he needed to complete the transaction.
In early October, the court will hear Twitter’s lawsuit against Musk to compel him to complete the transaction. While Twitter has maintained that its regulatory disclosures are complete, Musk has stated that he has the right to withdraw from the agreement because the company understated the amount of traffic generated by bots on its network. Musk is personally responsible for financing up to $33.5 billion of the acquisition under the terms of his Twitter offer, with the remainder coming from debt. However, he has announced commitments from other investors totaling more than $7 billion.
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Twitter’s agreement calls for a $1 billion break-up fee. However, it also requires “specific performance,” which means Musk must proceed with the purchase unless he can demonstrate that he was misled or that a “material adverse event” occurred on Twitter. He could also walk away if the debt required to complete the transaction is no longer available. The tension rose in the October court hearing, putting Musk in danger of being forced to proceed with the deal under its original terms or settle out of court.
In response to a tweet asking if he was “done selling,” Musk said “yes.” Adding, “In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners fail to come through, it is critical to avoid an emergency sale of Tesla stock.”
Following the news, Tesla shares were nearly flat. Tesla shares closed at $850, down slightly more than 2% on the day, before Musk’s insider sales worth almost $7 billion were made public via SEC filings.